Scottsdale 9/25/2014 3:48:40 AM
News / Law

Breach of Contract and Fraud Lead Invision Capital Management to Sue American Residential Properties, Inc

A few months ago, Invision Capital Management filed multiple claims against, Arizona based REIT, American Residential Properties, Inc. for breach of contract, fraud and several others. Although Invision Capital Management allegedly attempted to negotiate with American Residential Properties, the alleged negotiations failed and Invision claims it was forced to sue for the damages. 

These complaints, breach of contract, unjust enrichment, fraud and about eight other, detail how American Residential Properties, Inc. committed to a combined portfolio of $40 million to acquire and rehab properties through Invision and began with a first injection of capital in 2012. The next summer, the summer of 2013, Invision had acquired a total of 550 properties in the Phoenix, Indianapolis and Las Vegas markets. The total of these properties was worth an estimated $28 million and Invision alleges that it remediated the properties and began leasing with revenues going to ARPI in what is commonly referred to in the industry as a triple net lease. 

Since this venture was successful for a certain time, it seems to make no sense that ARPI allegedly then decided to pull funding from the acquisitions and the rehab costs. As a result, it is alleged that ARPI eventually defaulted Invision and took over those portfolios based on a lack of enough tenant revenue to pay ARPI the required rent under the triple net lease arrangement. The complaint alleges that this was specifically a result of a lack of initial funding by ARPI to rehab properties and get them stabilized so Invision could create enough rent to remain current on the master lease according to the agreement. 

Allegedly, ARPI has not tried to reconcile its failure to pay the costs of rehab since the dispute began. Furthermore, it is alleged that ARPI has a history of legal entanglements with other former partners, such as Landsmith, which reportedly settled out of court with ARPI. Other developers have also taken issue with the dealings of ARPI who uses its smaller partners to help grow ARPI’s business. 

Invision is putting the spotlight on ARPI, remaining steadfast in their pursuit of a just conclusion with a lawsuit. The company has filed multiple claims, but ARPI has made no attempt to address the allegations, and has so far failed to publicly disclose that the lawsuit exists to its shareholders or to the SEC in its most recent filings. 

About Invision Capital Management

Invision Capital Management is a private Phoenix-based property investment and management company that acquires and then rehabilitates affordable, entry-level housing in select U.S. markets. The Company manages a portfolio of properties that it has been growing since 2010.